GST Rates

On the 18th of May, 2017, the GST council convened to fix and finalise the much awaited GST rates for 1211 goods across 98 categories. The very next day, the council re-convened to finalise the GST rates for 36 categories for services.

To begin with, Hasmukh Adhia, Revenue Secretary, Ministry of Finance, Government of India has stated – that nearly 81% of the items will be classified at 18% GST rate slab and lower; while the remaining 19% will be taxed at 28% and above.

Here’s what you need to know about some of the main goods and services, classified across the 5 GST tax slabs.

Services

*Note – Luxury / Demerit Goods as listed above will also attract a compensation cess over and above the GST rate of 28%

Treatment of Luxury / Demerit Goods

In addition to the rates which have been fixed for major categories of goods and services, the GST council has approved the compensation rates for 5 luxury / demerit items. The proceeds of this cess will go into the compensation fund which would be used to bridge any tax revenue gap for states in the first five years of GST.

The items that will be levied with the compensation cess, over and above the GST rates which are applicable on them are as follows:

Items

GST Rate Applicable

Approved Cess Range

Cess Ceiling

Coal

5%

INR 400 / tonne

INR 400 / tonne

Pan Masala

28%

60%

135%

Tobacco

28%

61% – 204%

INR 4170 / thousand

Aerated Drinks

28%

12%

15%

Motor Vehicles**

28%

1% – 15%

15%

**Note – The cess will be 15% for cars with over 1500 cc engine capacity, other sports and luxury cars. The cess will be 1% for smaller cars.